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WorksheetsAP Macro Unit 5 Quiz
Total questions: 36
Worksheet time: 30mins
How can we increase public policy?
Technological Investment
Educational Spending
Fiscal Policy through government spending / taxation
Crowding-Out
Long-run aggregate supply is most likely to increase as the result of
increased investment in capital
an increase in aggregate demand
an increase in the real interest rate
an increase in the exchange rate
Which of the following policies might the Fed adopt to counter a recession?
An increase in the required reserve ratio
An increase in government spending
The purchase of bonds
A decrease in taxes
An open-market purchase of government bonds accompanied by a decrease in income taxes will result in which of the following in the short run?
a decrease in the price level
a decrease in the natural rate of unemployment
a decrease in unemployment
a decrease in nominal wages
If tax revenues are less than the total of government spending plus government transfer payments, which of the following will happen?
the national debt will increase
there will be an inflationary gap
the national debt will decrease
the tax multiplier will increase
To reduce the size of a country's national debt, a government could potentially take all of the following actions EXCEPT:
finance spending by borrowing
decrease the supply of government bonds
increase taxes
decrease expenditures
Steady advances in technological development will result in which of the following?
the LRAS curve will shift to the left, resulting in economic growth and a higher natural unemployment rate
the LRAS curve will shift to the left, resulting in a lower price level and a higher full employment level of output
the SRAS curve will shift to the right, resulting in a higher price level and a higher natural rate of unemployment
the SRAS curve will shift to the right, resulting in economic growth and a lower natural unemployment rate
A decrease in the demand for labor could be caused by which of the following?
an increase in wage rates
an increase in worker productivity
a decrease in wage rate
a decrease in the price of the product that the labor is used to produce
Which is not included in the definition of M1?
Fiat Currencies
Saving Deposits
Traveler's Checks
Checking Deposits
Which of the following would the FED use to increase the money supply?
Raise the discount rate
Raise the required reserves
Buy bonds/securities
Print more money
This shift would occur with...
An increased bank lending
A decrease in reserve ratio
The purchase of securities by the Fed
An increase in the Federal Funds Rate
Which of the following scenarios would cause the nations' money supply to increase?
Lowering interest rates
Raising interest rates
Decreased government spending
selling bonds to investors
The negative short-run relationship between the unemployment rate and the inflation rate
Aggregate production function
Long Run Phillips Curve
Short-Run Phillips Curve (SRPC)
Crowding out
(M x V = P x Y) ?
the idea that changes in the money supply
quantity theory of money
velocity of money
relationship between the unemployment rate and the inflation rate
Which of the following accurately describes the state of the macro-economy if it is operating at the intersection of the AD1 and SRAS2 curves?
It is operating below full employment and is in a short-run but not a long-run equilibrium.
It is operating at full employment and is in both a short-run and long-run equilibrium.
It is operating above full employment and is in both a short-run and long-run equilibrium.
It is in long-run equilibrium because the economy is at full employment.
The rate at which money changes hands
(a)
A country’s central bank purchased government bonds from the public in the open market. How would this action affect the nominal interest rate and the price level in the short run?
There would be an increase in the nominal interest rate and a decrease in the price level.
There would be a decrease in the nominal interest rate and a decrease in the price level.
There would be a decrease in the nominal interest rate and an increase in the price level.
There would be an increase in the nominal interest rate and a decrease in the price level.
Increase in human capital like hiring skilled workers can cause a rightward shift of the LRAS curve?
True
False
Country X's product prices have grown too big for the government's plans. Which policy can resolve the issue?
Decrease Taxes
Interest Rates
Decrease government spending
Increase government spending
When there is a budget deficit, the government usually decides to create money to resolve the issue
True
False
Which is an example of Discretionary Federal Spending?
Interest Payments on Debt
National Defense Spending
Social Security Spending
Medicaid/Medicare Insurance
The primary role of the Federal Reserve Bank is to steer the economy by
controlling the budget
setting spending levels.
controlling the money supply.
loaning out money.
Which of these are federal Assets?
Loans to commercial banks & securities
Loans from commercial banks & deposits
Loans to commercial banks & deposits
Loans from commercial banks & securities
A point on the LRAS is found on the maximum output line of a PPC curve?
True
False
If characters in squid game had a high amount of debt, and were cyclically unemployed we can assume...
Their country was producing at full employment.
Their country was experiencing a recessionary gap.
Their country was experiencing an expansionary gap.
Their country was producing above full employment.
What monetary policy helps expand economy?
Change in government spending & Raising taxes
Reduce reserve requirements & Decrease interest rates
Reduce reserve requirements & Raising taxes
Change in government spending & Decrease interest rates
If the actual inflation rate is less than the expected inflation rate, which of the following must be true?
There is an inflationary gap.
The economy is in long-run equilibrium.
Potential real output exceeds equilibrium real output.
The cyclical rate of unemployment equals zero.
The frictional rate of unemployment equals zero.
Which of the following will cause a movement from point X to point Y along the short-run Phillips curve (SRPC)
that is shown in the graph above?
An increase the expected inflation rate
An increase in the required reserve ratio
An increase in government spending
An increase in input costs
An increase in income taxes
Assume members of the Organization of the Petroleum Exporting Countries (OPEC) agree to a coordinated increase in oil production. If the economy is at equilibrium at point B, what effect will this have on the Phillips curve model in the long run?
The SRPC will shift to the left.
The SRPC will shift to the right.
The LRPC will shift to the right.
There will be a movement from point B to point C.
There will be a movement from point B to point A.
If the actual inflation rate is less than the expected inflation rate, which of the following must be true?
There is an inflationary gap.
The economy is in long-run equilibrium.
Potential real output exceeds equilibrium real output.
The cyclical rate of unemployment equals zero.
The frictional rate of unemployment equals zero.
Country X’s economy is currently at full employment. Assume Country X’s central bank increases the money supply by 2 percent over a prolonged period. According to the quantity theory of money, which of the following will happen in the long run for a given velocity of money?
Unemployment will increase by 2%.
Real output will increase by 2%.
Nominal output will increase by 2%.
The price level will decrease by 2%.
The natural rate of unemployment will decrease by 2%.
An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long run?
The unemployment rate will decrease.
The long-run aggregate supply curve will shift to the left.
The production possibilities curve will shift to the left.
The rate of inflation will decrease.
The long-run Phillips curve will shift to the left.
According to the quantity theory of money, if the money supply is $40 billion, real output is $100 billion, and the price level is 1.2, what is the velocity of money?
1.2
2.5
3.0
3.5
4.8
An increase in government spending financed by borrowing will result in which of the following?
Private savings will decrease in the short run.
The real interest rate will decrease in the short run.
The rate of physical capital accumulation will decrease in the long run.
Interest-sensitive private sector spending will increase in the short run.
Potential real output will increase in the long run.
This economy runs from contestants on Squid Games, what will happen to the LRAS if the human capital decreases?
The LRAS curve would shift to the left
The curve would shift upward
The LRAS curve would shift to the right
No change
Based on the table above, which of the following is most likely true?
The government has a budget surplus.
Consumer spending exceeds disposable income.
Public savings exceeds private savings.
National debt is decreasing.
The government is borrowing.
